(Original post by sanchez_ars)
how tho? it asked how would investment lead to higher increase in growth. thats multiplier effect, isnt it?

That is the multiplier effect, but more specifically the accelerator effect.
On the economicshelp page, accelerator effect is defined as "the accelerator effect states that investment levels are related to the rate of GDP"

So it's basically the same as the multiplier effect, but specifically about investment.

(Original post by TBNR GOAT)
On the multiple choice I got:
DACDABBDDADCCDCAACABDBBDD

I'm pretty sure I got 21 wrong after seeing the paper again but other than that it seemed fine.

I did context 1 and for the 12 marker I talked about how the increase in interest rates would essential cause the prices of house to go up as now the cost to borrow was greater. That would mean that the profit firms made would be reduced. This would then reduce consumption shifting AD left. Then would cause a reduced price level and a reduced output meaning that workers in the construction industry wouldn't be needed anymore creating unemployment in the sector.

I defined interest rates and monetary policy.

Any ideas on my mark out of 12?

Sounds good, obviously saying that consumption is part of AD=C+I+G+(X-M) shifts it inwards but sounds good. Definitions worth 2 then graph worth 4 then with linkages 6 for your explanation so sounds good.

25- using the data -10% of the UK workforce employed in construction- increase in demand for construction leads to increase in demand for labour as its derived demand. Greater number of people employed falling unemployment (could quote current UK 5.5%). Increase in AD as the number of people earning increases leading to a multiplier effect. Increasing AD further and leading to injections in the circular flow of income which is National output=national income =national expenditure. Problems being risk of demand pull inflation. It's cyclical demand and the workers are "low skilled" meaning that structural unemployment could occur in the long run.
Increase "in investment" leads so short term increase in ad as its a component and will shift out the SRAS and LRAS increasing the productive capacity of the economy. This has the opportunity to simultaneously improve all 4 macroeconomic objectives. Problems being lag time, and if demand grows quicker than the shift in AD. However it will reduce the price level, increase RNO which may make UK goods more price competitive dependent on exchange rate and other countries inflation rates. Obvs more but don't want to waffle on.
Opinions on above ?

(Original post by Layleexx)
That is the multiplier effect, but more specifically the accelerator effect.
On the economicshelp page, accelerator effect is defined as "the accelerator effect states that investment levels are related to the rate of GDP"

So it's basically the same as the multiplier effect, but specifically about investment.

(Original post by Layleexx)
That is the multiplier effect, but more specifically the accelerator effect.
On the economicshelp page, accelerator effect is defined as "the accelerator effect states that investment levels are related to the rate of GDP"

So it's basically the same as the multiplier effect, but specifically about investment.

Accelerator effect is actually how an increase in output leads to a greater increase in investment. It's the multiplier effect here

(Original post by Renzhi10122)
Accelerator effect is actually how an increase in output leads to a greater increase in investment. It's the multiplier effect here

No, surely not? I thought it would be an increase in output leading to a greater increase in investment AND and increase in investment leading to a greater increase in output?
"Accelerator effect: the relation between the change in new investment and the rate of change on national income"- that's what the text book said, and my teacher has said the same thing.

(Original post by Layleexx)
No, surely not? I thought it would be an increase in output leading to a greater increase in investment AND and increase in investment leading to a greater increase in output?

"Accelerator effect: the relation between the change in new investment and the rate of change on national income"- that's what the text book said, and my teacher has said the same thing.

I'm really hoping you're wrong here

Ok, after reading this, I'm scared that I misread the question haha.

So accelerator is when an increase in output causes a greater increase in investment, whereas the multiplier effect is the other way round. Your definition works, although it's slightly vague.

(Original post by Layleexx)
I don't think you HAD to talk about accelerator or multiplier effect in the question. I just wrote about it because I was lost.

Damn. If that's the case then I probably shouldn't have talked about the accelerator at all. Safe to say I didn't get anywhere near a 12 on that question!

4 for diagrams and 2 for definitions gets you 6 marks. You'll get the rest of the 6 marks, even if the accelerator is not relevant, or even if its wrong, since you don't get marked down, and basically, it goes 2 marks for every chain of reasoning, which you should get by talking about the multiplier.

(Original post by Renzhi10122)
4 for diagrams and 2 for definitions gets you 6 marks. You'll get the rest of the 6 marks, even if the accelerator is not relevant, or even if its wrong, since you don't get marked down, and basically, it goes 2 marks for every chain of reasoning, which you should get by talking about the multiplier.

Okay so I should get at least 6 marks. 8 if I'm lucky. Don't feel too pessimistic anymore. Thanks!

(Original post by Layleexx)
I realised that too but I still briefly talked about it and concluded that economic growth resulting from an increase in aggregate supply will be more sustainable and lead to less trade offs than economic growth resulting from an increase in aggregate demand. Do you think that'll be okay?

I obviously talked about inflation, BOP and employment as well.

Dyou think this will be okay?

Spoiler:

Show

Just realised I didn't talk about employment. F***!

Probably in hindsight I should have talked about it to make sure but I was pushed for time. I crammed a lot in, long chain of reasoning, good evaluation, lots of current UK figures and stuff.

**** you didn't talk about unemployment? Unemployment & exports was one of my paragraphs and short run growth & inflation was my other.